What Is Debt Consolidation?
Debt consolidation describes the act of taking out a new loan to repay other liabilities and consumer debts. Multiple debts are combined into a single, larger debt, such as a loan, generally with more favorable payback terms-- a lower interest rate, lower monthly payment, or both. Debt consolidation can be used as a resource to take care of student loan debt, credit card debt, and various other liabilities.
How Debt Consolidation Works
Debt consolidation is the process of using different forms of financing to pay off other debts and liabilities. If you are saddled with different forms of debt, you can request a loan to consolidate those debts into a single liability and pay them off. Payments are then made on the new debt until it is paid off completely.
Most individuals apply through their bank, credit union, or credit card company for a debt consolidation loan as their first step. It's a good place to start, especially if you have a great relationship and payment record with your institution. If you're denied, try exploring private mortgage companies or lenders.
Lenders are willing to do this for several reasons. Debt consolidation increases the probability of collecting from a debtor. These loans are usually provided by financial institutions such as banks and credit unions, but there are various other specialized debt consolidation service companies that provide these services to the general public.
A vital point to keep in mind is that debt consolidation loans don't erase the original debt. Rather, they merely transfer a consumer's loans to a different lender or kind of loan. For actual debt relief or for those who don't qualify for loans, it might be best to look into a debt settlement rather than, or in addition to, a debt consolidation loan.
For More Information About Debt Consolidation in Fountain Valley, California, Contact Thomas K. McKnight LLP At (800) 466-7507 or Visit Our Website at TKMLLP.Com for a Free Consultation!